Frequently Asked Questions
O2Founder is a community of founders invested in each other success, using an equity swap. Founders contribute up to 7% of their vested equity they would fully own (not additional stock issued by the company) to be in a pool consisting of equity contributed by other mutually selected founders. If your startup doesn’t go anywhere you’re still going to have exposure to a lot of high-quality startups, and each member has a long-term financial hedge provided by the overall performance of the pool’s equity.
Your contribution of a fraction of your personal equity stake in your own startup is governed by the rules that your company has in place. Sometimes, this could require approval by your board of directors. By offering optional equity exchange, O2Founder community hopes it can spread the risk felt by entrepreneurs across its founder group, so that they work more closely together and benefit more from any collective success. We believe that access to a network incentivized to provide resources, fundraising, introductions, hiring, etc., can only bolster success probability, and we can help explain to your board why.
Yes, you are welcome to explore the opportunity, with no obligation to join a community of like-minded founders across industries and stages. We all do well by helping each other do well. Should you and others you know already mutually agree to form a pool, we’ll be there to help.
The equity you swap with a pool will appear on your CAP table as the corp pool being the owner of a small portion of your company’s common stock. This should not have any legal or financial ramifications that would be of significance to potential new preferred investors. Your participation in the founders community should be seen as a positive thing by investors. You didn’t sell your shares and put money in your pocket, and more than that you took a step to align yourself with a community of other founders and experts who can be of future benefit for operations, customer introductions, strategic advice, fundraising and much more.
Yes. Matching is based on preferences, stage and other factors, but each founder makes the decision to partner or not with companies/entrepreneurs they want to share equity with. Founders disclose an initial ranking of one another and once a top-ranked subset becomes clear, the founders can opt in and form the pool. A pool is also dynamic and founders in the pool can invite new startups based on their interactions. Overall, this is based on the concept that founders are often good judges of other founders/startups. O2Founder then serves as the administrator and service provider of the pools.
Founders do not need to contribute any cash, just a small percentage of their founder equity. O2Founder cover all legal infrastructure and management costs, finance pool formation and operates as a community service provider to the pool members. We bring experienced mentors and investors into the community, and some pools may vote to include a small number of cash-contributing pool members to set up additional investment vehicles. We do take a proportionate membership in each pool (if it is a 30 member pool, we will be 31th member). In the future, we reserve the right for a 10-20% (depending on pool risk) carry based on pool outcomes.
The opportunity to join the preeminent full-stack community of founders and startup builders who are ready to invest in your success is worth the time spent.
After applying, you’ll have a brief screening interview with a member of the O2Founder team. If you’re a valid candidate for pool participation, we will introduce you to other prospective pool members. We make it easy to get the nuggets of information you need at a glance and offer opportunities for deeper follow-on conversation, collaboration, and diligence if you wish. Overall, we think that founders are often good judges of other founders/startups.They can sniff out failure. Selection is done through peer ranking by the applicants themselves. Top make it in.
The beauty of pool construction is that we only put founders through an initial vetting process, as well as a due diligence process (such as team, current investors, traction, product, vision and market) afterward. But what we don't do is select who goes in the pool as it is a peer-selected process. So the way it works is you get to select the top companies that you want to share equity with based on all of the screen materials that we supply, you can request an intro, a one-on-one meeting, or you can do a group call and, after that, you get to rank the top choice of startups. We use a stable market matching algorithm to create the pool out of all of these cumulative rankings that everyone submits and then pools are formed by mutual consensus acceptance of all the members. We think that's a way to reduce adverse selection that can make it into the pool. It is a community you want to be in with people who actually can be helpful to you and can use your help along with the financial diversification and high quality, so that's the reason for the peer selection process.
Single pool, based on rounds, but new companies can join a pool with consent from all existing companies.
Early insurance were mutually self-forming pools against catastrophe. But unlike the insurance space, the math here works under the Power Law, where most will fail, and only a few will be breakout winners, supporting the rest. It is an inevitable part of pursuing a high-risk entrepreneurial journey. Ultimately the purpose of the pool is to benefit everyone from the accumulating social capital of their network, to be better founders and operators. But no matter how good the team and execution, the outcome is uncertain. So the purpose of the pool is to de-risk the founder's journey by having everyone share in the financial results of the community as a whole.
When two or more founders from different startups join a pool, they allocate equity in their startup to the pool and get a proportionate amount of shares in it. This proportion is determined by the fair market price of their participating startups at the time of a pool formation. VCs and angels act as a signal as well as what sets valuation. O2Founder can help with due diligence and fair market price evaluation by various industry-standard methods that help founders to be assured, that their ownership interest in the pool, in absolute terms and relative to others, is fair and equitable. Eventually, pools formed by the general collective agreement of the members, founders can decide to handle things as they prefer.
Pools are rolling and formed by collective mutual agreement, meaning a majority of members can invite new companies into an existing pool. There is no elimination once a company is in the pool, it is based on shared risk and so selection is the most important part of the step. A typical range for a pool might be 10 to 50 members. But larger groups are possible. We facilitate transparency and metrics and meeting for founders to evaluate other founders.
This is mostly an academic argument. If 90% of your holdings are your company, you are still motivated to make it a success, despite the 5-10% diversification. And most great founders are motivated by more than pure financial upside.
Only 1-7% of founder's shares are contributed. 90% or more retained. It's insurance; not a plan B.
With a stake in a O2founder pool, ""walking away"" doesn't leave the entrepreneur wealthy, but we hope, covers some opportunity cost. A safety net. This can provide a source of strength in VC negotiations as well as a foundation for the founder to make calm, rational decisions rooted in long term success.
Founders who have at least raised a seed round from experienced angels beyond friends-and-family and/or have a revenue-earning product in the market. We are forming a pool of members from seed to unicorn status. However, we are screening all funded companies to ensure a valuation and demand from o2founder community.
We target 5% of Founders' vested equity, so that it provides a meaningful diversification and moves the needle for them when an exit happens in their pool
We are not an incubator or a fund and we don't do demo days. We will help all founders with connections and investor intros as much as we can, if needed. But the bigger network is the investors in other founders in the pool. We make it easy to share investor pipelines.
It is a complex structure under the hood. There is a master LLC, holding c corp and an investment advisor.
Tax implications for the founders are similar to their founder stock obligations, when liquidation happens
O2Founder is a community of founders invested in each other success, using an equity swap. Founders contribute up to 7% of their vested equity they would fully own (not additional stock issued by the company) to be in a pool consisting of equity contributed by other mutually selected founders. If your startup doesn’t go anywhere you’re still going to have exposure to a lot of high-quality startups, and each member has a long-term financial hedge provided by the overall performance of the pool’s equity.
Your contribution of a fraction of your personal equity stake in your own startup is governed by the rules that your company has in place. Sometimes, this could require approval by your board of directors. By offering optional equity exchange, O2Founder community hopes it can spread the risk felt by entrepreneurs across its founder group, so that they work more closely together and benefit more from any collective success. We believe that access to a network incentivized to provide resources, fundraising, introductions, hiring, etc., can only bolster success probability, and we can help explain to your board why.
Yes, you are welcome to explore the opportunity, with no obligation to join a community of like-minded founders across industries and stages. We all do well by helping each other do well. Should you and others you know already mutually agree to form a pool, we’ll be there to help.
The equity you swap with a pool will appear on your CAP table as the corp pool being the owner of a small portion of your company’s common stock. This should not have any legal or financial ramifications that would be of significance to potential new preferred investors. Your participation in the founders community should be seen as a positive thing by investors. You didn’t sell your shares and put money in your pocket, and more than that you took a step to align yourself with a community of other founders and experts who can be of future benefit for operations, customer introductions, strategic advice, fundraising and much more.
Yes. Matching is based on preferences, stage and other factors, but each founder makes the decision to partner or not with companies/entrepreneurs they want to share equity with. Founders disclose an initial ranking of one another and once a top-ranked subset becomes clear, the founders can opt in and form the pool. A pool is also dynamic and founders in the pool can invite new startups based on their interactions. Overall, this is based on the concept that founders are often good judges of other founders/startups. O2Founder then serves as the administrator and service provider of the pools.
Founders do not need to contribute any cash, just a small percentage of their founder equity. O2Founder cover all legal infrastructure and management costs, finance pool formation and operates as a community service provider to the pool members. We bring experienced mentors and investors into the community, and some pools may vote to include a small number of cash-contributing pool members to set up additional investment vehicles. We do take a proportionate membership in each pool (if it is a 30 member pool, we will be 31th member). In the future, we reserve the right for a 10-20% (depending on pool risk) carry based on pool outcomes.
The opportunity to join the preeminent full-stack community of founders and startup builders who are ready to invest in your success is worth the time spent.
After applying, you’ll have a brief screening interview with a member of the O2Founder team. If you’re a valid candidate for pool participation, we will introduce you to other prospective pool members. We make it easy to get the nuggets of information you need at a glance and offer opportunities for deeper follow-on conversation, collaboration, and diligence if you wish. Overall, we think that founders are often good judges of other founders/startups.They can sniff out failure. Selection is done through peer ranking by the applicants themselves. Top make it in.
The beauty of pool construction is that we only put founders through an initial vetting process, as well as a due diligence process (such as team, current investors, traction, product, vision and market) afterward. But what we don't do is select who goes in the pool as it is a peer-selected process. So the way it works is you get to select the top companies that you want to share equity with based on all of the screen materials that we supply, you can request an intro, a one-on-one meeting, or you can do a group call and, after that, you get to rank the top choice of startups. We use a stable market matching algorithm to create the pool out of all of these cumulative rankings that everyone submits and then pools are formed by mutual consensus acceptance of all the members. We think that's a way to reduce adverse selection that can make it into the pool. It is a community you want to be in with people who actually can be helpful to you and can use your help along with the financial diversification and high quality, so that's the reason for the peer selection process.
Single pool, based on rounds, but new companies can join a pool with consent from all existing companies.
Early insurance were mutually self-forming pools against catastrophe. But unlike the insurance space, the math here works under the Power Law, where most will fail, and only a few will be breakout winners, supporting the rest. It is an inevitable part of pursuing a high-risk entrepreneurial journey. Ultimately the purpose of the pool is to benefit everyone from the accumulating social capital of their network, to be better founders and operators. But no matter how good the team and execution, the outcome is uncertain. So the purpose of the pool is to de-risk the founder's journey by having everyone share in the financial results of the community as a whole.
When two or more founders from different startups join a pool, they allocate equity in their startup to the pool and get a proportionate amount of shares in it. This proportion is determined by the fair market price of their participating startups at the time of a pool formation. VCs and angels act as a signal as well as what sets valuation. O2Founder can help with due diligence and fair market price evaluation by various industry-standard methods that help founders to be assured, that their ownership interest in the pool, in absolute terms and relative to others, is fair and equitable. Eventually, pools formed by the general collective agreement of the members, founders can decide to handle things as they prefer.
Pools are rolling and formed by collective mutual agreement, meaning a majority of members can invite new companies into an existing pool. There is no elimination once a company is in the pool, it is based on shared risk and so selection is the most important part of the step. A typical range for a pool might be 10 to 50 members. But larger groups are possible. We facilitate transparency and metrics and meeting for founders to evaluate other founders.
This is mostly an academic argument. If 90% of your holdings are your company, you are still motivated to make it a success, despite the 5-10% diversification. And most great founders are motivated by more than pure financial upside.
Only 1-7% of founder's shares are contributed. 90% or more retained. It's insurance; not a plan B.
With a stake in a O2founder pool, ""walking away"" doesn't leave the entrepreneur wealthy, but we hope, covers some opportunity cost. A safety net. This can provide a source of strength in VC negotiations as well as a foundation for the founder to make calm, rational decisions rooted in long term success.
Founders who have at least raised a seed round from experienced angels beyond friends-and-family and/or have a revenue-earning product in the market. We are forming a pool of members from seed to unicorn status. However, we are screening all funded companies to ensure a valuation and demand from o2founder community.
We target 5% of Founders' vested equity, so that it provides a meaningful diversification and moves the needle for them when an exit happens in their pool
We are not an incubator or a fund and we don't do demo days. We will help all founders with connections and investor intros as much as we can, if needed. But the bigger network is the investors in other founders in the pool. We make it easy to share investor pipelines.
It is a complex structure under the hood. There is a master LLC, holding c corp and an investment advisor.
Tax implications for the founders are similar to their founder stock obligations, when liquidation happens
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